(14 October 2020) Budget 2021 did not offer the majority of older people the support they need to meet the rising cost of living that is anticipated by the impacts of the carbon tax, COVID-19 and Brexit and it did not contain adequate measures to support us to age in place.
The top rate of all current State pension contributions remains substantially below the at risk of poverty rate. Budget 2021 saw no increase in the core State pension rates: didn’t allow for any increase in the cost of living or support people to withstand economic shocks. Income for those who are living with other people has stood still since 2019.
While the Government has increased some secondary benefits with the view to targeting people in the most vulnerable situations, which is a sensible approach, if people had adequate income to meet the true cost of ageing, they would be able to have choice over how to spend their money to best meet their specific needs.
The net effect of Budget 2021 on the income older person headed households is:
- Those under 80 and living with another person are €1.88 better off per week following Budget 2021 and have seen a weekly increase of €17.51 since 2010
- For those under 80 and living alone, they are €6.88 better off per week following Budget 2021, and have seen a weekly increase of €31.31 on 2010 income
- For those over 80 and living with another person, their weekly income has risen by €1.88 in Budget 2021, and €17.51 since 2010
- For those over 80 and living alone, they are better off by €6.88 per week following Budget 2021, and €31.31 since 2010.
Did Budget 2021 Create a Fairer Pension System?
Overall, 523,375 people receive a State Pension in Ireland with 166,000 people receiving the Living Alone Allowance. Older people are not an homogenous group, and have a diversity of experiences, living situations and levels of resilience. We know that older people in Ireland depend on social protection for three-quarters of their income and that 11.4% of them were at risk of poverty in 2018 which is a 20,000 increase year on year.
The Roadmap for Pensions Reform committed to benchmarking the contributory State pension at 34% of average weekly earnings by the end of 2018: this has not yet been implemented over successive Budgets. In order to move the current pension payment towards the delivery of that target, Age Action called on the Government to increase the weekly pension payment by €5 over a course of three years. We know that the top rate of the contributory State pension currently sits at 32% of average earnings: this is a worrying 1.2% yearly drop on the 2018 figure and has fallen further below the 34% commitment in the Roadmap for Pensions Reform from 2018. A failure to increase the State pension in Budget 2021 will mean that this gap continues.
An additional €5 per week on the State pension would cost an estimated €172m for 2021. Reducing the tax relief on private pensions to 33%, as proposed by the National Pensions Framework, would offset this cost and would not only provide the funds for significant increases for all pensioners, it would also help to reduce the massive income inequality that exists amongst older people.
While we were pleased to see the confirmation yesterday that the rise in the State pension age would not proceed to 67 in January, it is not acceptable that this is simply deferred – rather than immediately removed from legislation – ahead of the planned Commission on Pensions committed to under the Programme for Government. The new Commission is welcome. However, it can provide us with a real opportunity to develop a fairer retirement and pensions system only if those most directly affected (such as women, workers and older people themselves) are sitting at the table when the decisions are being made. It was also disappointing not to see certainty in the Budget given to those who are required or chose to retire at 65, despite commitment in the Programme for Government to an ‘Early Retirement Allowance or Pension’ at the same rate as Jobseeker’s Benefit but without a requirement to engage in activation measures or be seeking work.
Did Budget 2021 Address the Cost of Ageing?
Age Action encourages the Government to take ambitious climate action to ensure the people and planet are protected from the impacts of climate change.
The introduction of the Carbon Tax in the absence of recent research on fuel poverty risks pushing the burden of climate action on people who are in the most vulnerable situations, which is contrary to the principle of climate justice and the stated aim of the Government. Particularly for older people in rural locations, who are heavily dependent on private transport in daily life, increases in the cost of petrol and diesel without an increase in pension rates has a disproportionate negative impact. Age Action notes approximately 70% of pensioners will not receive the increase in the Fuel Allowance and will be left trying to meet extra costs from income already stretched in the context of COVID-19 and existing rising costs An urgent review of the eligibility criteria for the Fuel Allowance scheme is needed to assess whether it is adequate and sufficiently meeting need. In terms of the Living Alone Allowance, which is another targeted social welfare measure by the Government, Age Action notes that 70% of pensioners will not benefit from the increase. These people will not see an increase in their income under Budget 2021 despite the expected continued increase in the cost of living; essentially this translates to a reduction in money in people’s pockets.
Did Budget 2021 take steps to Enable Older People to Age in Place?
The allocation for home supports – while welcome – does not meet the current waiting list of some 4,550 people and is inadequate. COVID-19 highlighted that the system of care in Ireland remains disjointed and undervalued. We know that the on-going absence of a statutory model to provide a continuum of care between home supports and nursing homes has resulted in people left without adequate care. There was a welcome commitment in the Programme for Government to increase home care hours, introduce a statutory home care scheme and to constitute a Commission on Care. While the announcement of extra hours and supports in the HSE Winter Plan is welcome, it does not fund additional home care until 2021 and it is unclear whether the extra 5 million home care hours and supports announced yesterday will be delayed until next year also and how this year’s need will be met. We know there are known issues around home care related to governance, sustainable funding, equality of access and quality standards regulation. We need the immediate establishment of the Commission on Care and for it to be tasked with reforming our current model of disconnected and institutionalised care.
As we move to an increasingly digitised society, supports to combat digital exclusion are urgently needed to ensure older people stay connected and can easily access services and information. We know that digital exclusion is a reality for at least 50% of people over the age of 65, with the associated cost being one of the barriers to access for older people.
It is disappointing to see a further delay until November 2020 to enact Budget commitments from last year for an increase in medical card threshold for over 70s and reduced prescription charges. These will go some way to reduce the out of pocket costs for older people but ultimately this does not remove the structural barriers to accessing affordable and adequate health care.
Conclusion
Some people who are over 80 are people in the most vulnerable situation in our society with no capacity to increase their income while dealing with the increasing cost of ageing. Budget 2021 measures saw those living with another person receive €1.88 and those living alone receive €6.88to cope with on-going COVID-19 costs, Brexit, the carbon tax increase and the rising cost of living in 2021.
In working for equality, it is critical that we focus on equality of outcomes not just equality of opportunity.
